We are so excited to announce V2 of Opyn Protocol, the most powerful and capital-efficient DeFi options protocol, is now live on Ethereum mainnet!
Opyn users can start trading ETH-USDC options on Opyn v2 immediately using opyn.co.
Opyn v1 (Convexity Protocol) laid the foundation for DeFi options as the first live ERC20 options protocol. For the first time, anyone could create, buy, and sell options on any ERC20 token. Since the Opyn v1 release in February 2020, more than 100 series have been launched in the protocol with over $105mm of cumulative notional volume.
Over this time, we’ve continuously listened to feedback from Opyn users and the wider DeFi community, and we have been focusing on researching and developing Opyn v2, which lays a foundation for the most powerful, capital-efficient DeFi options protocol.
What’s new with v2?
Today, we release:
- Gamma Protocol: the most powerful, capital efficient DeFi options protocol;
- An updated interface for trading options using Gamma Protocol
Opyn v2 has many new features and technical improvements compared to Opyn v1.
Gamma Protocol lays the foundation for more capitally efficient options starting with spreads. Spreads allow long oTokens to collateralize short oTokens, enabling users to post the max loss of a structure as collateral.
Auto-exercise for In The Money options upon expiry
Gamma Protocol now has auto-exercise for in the money options, so option holders don’t need to take action before or at expiration. Upon expiry, proceeds for long and short option holders are calculated and can be redeemed at any point after the proceeds have been finalized with a settlement price.
European, cash-settled options
Gamma Protocol moves to cash-settled, European options to enable margin improvements by allowing for safe constructions of spreads. European options mean that option holders can exercise options only upon expiry.
Cash settlement means that option holders don’t have to provide the underlying asset in order to exercise. Rather, the options are settled in the collateral asset, and option holders receive a cash payout on exercise (difference in value between strike and underlying asset price in terms of the strike asset) is transferred.
Earn yield (& gov tokens) on collateral
Gamma Protocol now allows for yielding assets (eg. cTokens, aTokens, yTokens) to be used as collateral for options, and allows for farmers to harvest earned and airdropped Tokens (eg. COMP with cToken collateral). The first options launched are USDC collateralized, but in the next few months, we will release options with yielding collateral.
Call options without multipliers
Gamma Protocol allows for call options without any multipliers so 1 call option oToken will correspond to 1 unit of the underlying asset (eg. 1 call oToken on 1 ETH will correspond to 1 call option on 1 ETH)
Since vault collateralization is checked at the end of a transaction, it’s possible to mint options without collateral as long as they are burned before the end of the transaction.
Operators to allow contracts to act on a user’s behalf
Operators are a smart contract feature that allow users to delegate control of their vaults to a third-party smart contract. This could be a smart contract that rolls over user options on their behalf, a fund manager to execute trades on behalf of a user, or a vast amount of other interactions that developers can build on top of the protocol. Developers can use this functionality to create all sorts of cool strategies, including the VIX index!
Oracle used for option settlement price
Cash settlement requires an oracle to determine the payout at expiry. The Gamma Protocol architecture is generalizable to allow for different oracles for different assets.
WETH-USDC options are already available at Opyn, and these will use the Chainlink oracle to get the ETH price. There are no liquidations needed as max loss is posted as collateral.
Deterministic option contract addresses, names, symbols
Gamma Protocol allows for specific oToken details to determine the address, name and symbols and each oToken. For example, the symbol for the $800 strike WETH call option expiring on February 26th, 2021 would have the following symbol: oWETHUSDC/WETH-26FEB21–800C
Anyone can create new options if the product has been whitelisted
A product is a combination of specifying the underlying asset, strike asset, and collateral asset for an option and whether it’s a call or a put. For any of these whitelisted products, anyone can create a new option, specifying the strike and expiry. Expiration times are currently fixed to 8AM UTC to prevent fragmentation of liquidity across a variety of expirations within the same day.
Gamma Protocol’s options (oTokens) are ERC20s tokens, so they can be traded on any decentralized exchange that follows the ERC20 standard.
The Opyn interface is using 0x Exchange to trade options (oTokens), enabling users to trade using the 0x Order Book.
What happens to Opyn V1?
Opyn v1 will remain live on the Ethereum network, providing a venue for American, physically settled options on ERC20 assets. Opyn V1 interface is available on: https://v1.opyn.co
Security and Audits
Security is a top priority for Opyn. Gamma Protocol was audited by Open Zeplin (report will be publicly available before December 31st, 2020), formal verification was completed by Certora and the Opyn Bug Bounty has been running for over 4 weeks.
Further security audits will be running in the next few months to ensure there are up-to-date audits with the latest security best practices to identify new technologies that might contain current undiscovered vulnerabilities.
Thank you for making Opyn v2 possibile!
Opyn v2 wouldn’t be possible without the help of the Opyn Community! We’ve have been listening every piece of feedback and idea from our users and others within the DeFi community. These suggestions and feedback greatly motivated the team to research and subsequently build a cutting-edge technology that lays a foundation for the most powerful, capital efficient DeFi options protocol.
At Opyn we value our community and we strongly encourage anyone to contribute in improving Opyn. There are several ways you can contribute:
- 🛠️ BUIDL on top of Opyn. There are many applications and interfaces that can be built using Opyn. More info on: https://medium.com/opyn/buidling-with-options-otokens-in-defi-pt-2-f561eb67f4af or Join #dev channel on Opyn Discord
- 🐞 Participate in the Bug Bounty. Security is one of our highest priorities, so you can participate to v2 Bounty Program with rewards up to $100k. Learn more on https://opyn.gitbook.io/opyn-v2/get-started/security#bug-bounty-program
- 👩🚀 Become an Opynaut: members of the Opyn Community who share our values and are eager to take the responsibility to Spread the Knowledge! More info on https://medium.com/opyn/calling-for-opynauts-eaf8703fa8e5
- 🍄 Join Opyn. We’re hiring! You can find the available positions here: https://angel.co/company/opyn-4
- ✍️ Give us a feedback. We wouldn’t be here without inputs of the community. Join #feedback channel on Opyn Discord
- 📈 Become a Market Maker for Opyn. We are setting up incentives programs for Market Makers and would love to get in touch with you. Send us an email to email@example.com